Lagardere Sa · EURONEXT:MMB
Lagardere Sa — Investor Presentation (March 2013)
63 slides from Lagardere Sa's investor presentation, March 2013
Slide 1: Investor Presentation March 2013
Investor Presentation March 2013 1
Slide 2: Table of contents
Investor presentation, March 2013 Table of contents 1) Group profile and strategy slide 3 2) Group performance in 2012 slide 14 3) Outlook and guidance slide 23 4) Appendix slide 27 FY 2012 financials slide 28 Other business data slide 45 Focus on travel retail slide 54 2
Slide 3: Group profile and strategy
Lagardere Group profile and strategy
Slide 4: Lagardère, a diversified Media group
Investor presentation, March 2013 Lagardère, a diversified Media group 1st Magazine publisher World leader 2nd Publisher worldwide in France Leader in marketing rights in travel retail and duty on European soccer 1st TV production group free 1st Publisher in Europe in France over 4,000 stores Leader
Slide 5: 2003-2012: refocus on media, with a balanced business mix
Investor presentation, March 2013 2003-2012: refocus on media, with a balanced business mix 2003 2012 2015 As % of Recurring EBIT before associates 16 % Unlimited (3) Unlimited 35 %(1) 16% Active Hachette Livre Active 27% 57% 31 % Services: Services: Publishing Travel retail Hachette - Travel retail
Slide 6: Our equity story
Investor presentation, March 2013 Our equity story ...combining growth A resilient and return to platform... shareholders 1 Resiliency in ...with 2 Publishing... development of high growth activities... ...while 4 ...and return to maintaining a 3 shareholders. solid balance sheet... 6
Slide 7: Lagardère Publishing: track record
Investor presentation, March 2013 1 Lagardère Publishing: track record Resilient revenues and double-digit margins Net sales Operating margin €2,273m €2,130m €2,159m €2,165m €2,077m €2,038m 13.2% 11.2% 11.4% 11.6% 10.8% 10.7% 2007 2008 2009 2010 2011 2012 « Twilight » effect 7
Slide 8: Lagardère Active: a more resilient profile
Investor presentation, March 2013 1 Lagardère Active: a more resilient profile 1. Reduce exposure to advertising Exposure to advertising (as % of sales) 57% 57% 53% 54% 43%* 42% 2007 2008 2009 2010 2011 2012 * Excluding PMI and Russian radio, sold in 2011 2. Develop and monetize our brands and conte
Slide 9: Lagardère Publishing: growth in digital
Investor presentation, March 2013 2 Lagardère Publishing: growth in digital E-book: an opportunity, thanks to a sound business model 1. Relying on e-reader device penetration 2. A significant share in the Anglo-Saxon countries but e-books remain small in France 3. Our strategy is aimed at maintainin
Slide 10: Lagardère Services: growth in travel retail
Investor presentation, March 2013 2 Lagardère Services: growth in travel retail 1. Increase in air traffic 2. Expansion on emerging markets Global long-term Passenger Forecast Travel Retail revenue in emerging markets* 12 10 €693m Passengers (billion) CAGR 4,5 8 +4.2% 6 33%33%of 3,1 2,5 Internationa
Slide 11: Sound financial position
Investor presentation, March 2013 3 Sound financial position Gross debt breakdown: well-balanced funding sources 2012 • Gearing* is 57% in 2012 vs. 42% in 2011. 7% • Successful issue in October of a five-year maturity bond totalling €500 million. Bonds ‒ lengthened debt profile maturity; 28% 65% Ban
Slide 12: Focus on return to shareholders
Investor presentation, March 2013 4 Focus on return to shareholders Cash Flow: cumulative 2003-2012 €2.6bn returned to shareholders Cumulative cash generated by Cumulative use operations and of cash disposals Share buyback Dividend Exceptional dividend Other 7% 501 500 Disposals €4 447m 419 37% Acqu
Slide 13: Travel retail, digital, and sports are clear expansion areas
Investor presentation, March 2013 Travel retail, digital, and sports are clear expansion areas Lagardère businesses mapping EXPAND Growth Digital Travel retail TV production Sports Rights Book Magazines, Radio, TV Publishing channels Distribution DIVEST ENHANCE VALUE Market position 13
Slide 14: Group performance in 2012
Lagardere Group performance in 2012
Slide 15: 2012 M&A in line with our strategy
Investor presentation, March 2013 2012 M&A in line with our strategy: invest in fast growing activities, and reduce exposure to lower growth activities Acquisitions Disposals LeGuide.com (shopping comparator) Declining OLF (book distribution in Digital BilletReduc.com (online ticketing) business Swi
Slide 16: Group net sales – 2012
Investor presentation, March 2013 Group net sales – 2012 Net sales €7,657m €7,370m -0.2% Like-for-like €7,254m €7,239m Like-for-like 2011 net sales* like-for-like 2012 net sales* 2011 2012 In 2012, the Lagardère group activity held up well, almost stable on a like-for-like basis. The development str
Slide 17: Key figures – Group
Investor presentation, March 2013 Key figures – Group (€m) 2011 2012 Change Net sales 7,657 7,370 -3.7% Media Recurring EBIT before associates 414* 358 -€56m Net income – Group share (707) 89 +€796m Adjusted net income – Group share 226*** 207 -€19m Cash from operating activities 257 391 +€134m Net
Slide 18: 2012 Media Recurring EBIT, slightly above the FY guidance
Investor presentation, March 2013 2012 Media Recurring EBIT, slightly above the FY guidance +€414m -€49m -€10m +€355m +€3m +€358m 2011 Reported Ebit Change of Scope Other 2011 Comparable Business 2012 Reported Ebit Performance PMI and Russian Provision IOC: -€22m radio sold LeGuide.com: €5m Foreign
Slide 19: Lagardère Publishing: financial data
Lagardère Publishing: financial data 2012 net sales by geographical area 2012 net sales by activity Other Education Other 17% 18% France 23% 17%* 22%* 20%* 32% Spain 33%* 8% Reference Illustrated 9%* 4% Books 4%* 15% 15%* USA & Canada UK & General 23% Australia Literature 23%* 20% 40% 18%* 39%* 2012
Slide 20: Lagardère Active: financial data
Lagardère Active: financial data 2012 net sales by geographical area 2012 net sales by activity International Radio 12% 20% 34%* 18%* Magazines & other 57% 66%* Television 23% France 16%* 88% 66%* 2012 activity trends (-3.9% l-f-l): Change 2011 vs. 2011 • Advertising down by 5.9%, Magazines circulat
Slide 21: Lagardère Services: financial data
Lagardère Services: financial data 2012 net sales by geographical area 2012 net sales by activity Switzerland Asia/ 11% Pacific Spain 12%* 8% Wholesale 10% 6%* Distribution 12%* Other 26% USA & 5% 28%* Canada 4%* 6% 6%* France 44% 56% 28% 47%* Eastern 29%* 53%* Europe Integrated 20% 18%* Retail Belg
Slide 22: Lagardère Unlimited: financial data
Lagardère Unlimited: financial data 2012 net sales by geographical area 2012 net sales by activity Rest of Germany Other World 25% 17% 20% 21%* 16%* 16%* Media rights 40% UK 46%* Asia 21% 7% Marketing 6%* rights 24%* 43% France 38%* 11% Rest of Europe 11%* 16% 2012 activity trends (-5.9% l-f-l): 22%
Slide 23: Outlook and guidance
Lagardere Outlook and guidance
Slide 24: Expected sale of EADS (7.4% stake)
Investor presentation, March 2013 Expected sale of EADS (7.4% stake) Multi-party agreement signed on December 5, 2012, clearing the way for EADS’ governance and shareholding structure to be streamlined. The EADS Extraordinary General Meeting will be held on March 27, 2013. Lagardère expects to sell
Slide 25: Canal+ France
Investor presentation, March 2013 Canal+ France Legal action on February 13, 2013, against Vivendi and Groupe Canal+ for the purpose of obtaining a restitution of €1.6 billion in cash to Canal+ France: • Lagardère believes that Canal+ France cash management agreement is legally contestable and that
Slide 26: Guidance 2013
Investor presentation, March 2013 Guidance 2013 In 2013, the Media recurring EBIT before associates is expected to increase by between 0% to 5% at constant exchange rates, compared to 2012. This guidance is based notably on the assumption of a circa 5% decrease of advertising sales for Lagardere Act
Slide 27: Appendix
Lagardere APPENDIX
Slide 28: Consolidated income statement (1/2)
Consolidated income statement (1/2) 2011 2012 Lagardère Other Lagardère Other (€m) Media activities* Total Media activities* Total Net sales 7,657 - 7,657 7,370 - 7,370 Recurring EBIT before 414 (12) 402 358 (19) 339 associates** Income from associates 33 79*** 112 16 89*** 105 Non-recurring items (
Slide 29: Consolidated income statement (2/2)
Consolidated income statement (2/2) 2011 2012 Lagardère Other Lagardère Other (€m) Media activities* Total Media activities* Total EBIT (245) (244) (489) 201 27 228 Net interest expense (44) (51) (95) (25) (57) (82) Income before tax (289) (295) (584) 176 (30) 146 Income tax expense (150) 45 (105) (
Slide 30: Adjusted net income – Group share
Adjusted net income – Group share (€m) 2011 2012 Net income attributable to the Group (707) 89 Equity accounted contribution from EADS (79) (89) Amortisation of acquisition-related intangible assets and other acquisition-related expenses* 71 27 Impairment losses on goodwill, tangible and intangible
Slide 31: Consolidated statement of cash flows
Consolidated statement of cash flows (€m) 2011 2012 Cash flow from operations before interest, taxes 597 552 Changes in working capital (170) (21) Cash flow from operations 427 531 Interest paid & received, income taxes paid (170) (140) Cash generated by/(used in) operating activities 257 391 Acquis
Slide 32: Change in net debt in 2012
Change in net debt in 2012 €1,700m €31m €64m €192m €144m €1,269m Net debt as of Net cash from Dividends paid Acquisition of FX, scope and Net debt as of 31/12/2011 operating & minority other items 31/12/2012 investing interests activities 32
Slide 33: Consolidated balance sheet
Consolidated balance sheet (€m) 2011 2012 Non-current assets (excl. investments in associates) 3,626 3,922 Investments in associates 1,771 1,451 EADS 277 - Other associates 1,494 1,451 Current assets (other than short-term investments and cash) 2,781 2,847 Short-term investments and cash 737 703 Hel
Slide 34: Main associates
Main associates Balance Sheet Income Statement 2011 2012 2011 2012 (€m) EADS (7.4%)* 277 - 79 89 Canal+ France (20%) 1,197 1,154 (310) (43) Marie Claire (42%) 125 125 6 5 Amaury (25%) 99 98 7 1 Other associates 73 74 20 9 TOTAL 1,771 1,451 (198) 61 * Reclassified in held-for-sale assets 34
Slide 35: Analysis of non-recurring/non-operating items in 2012
Analysis of non-recurring/non-operating items in 2012 Total Lagardère Lagardère Lagardère Lagardère Lagardère Other Total (€m) Publishing Active Services Unlimited Media activities Lagardère Restructuring costs (3) (28) (7) (2) (40) - (40) Gains/(losses) on disposals 3 (4) (3) 1 (3) - (3) Impairment
Slide 36: Off balance sheet commitments
Off balance sheet commitments (€m) 2011 2012 Commitments to purchase shares from third parties 25 - (other than minority interests) Commitments given in connection with ordinary activities: - contract guarantees and performance bonds 102 156 - guarantees in favour of third parties or 44 34 non-conso
Slide 37: Lagardère Unlimited – Guaranteed minimum
Lagardère Unlimited – Guaranteed minimum At December 2012 entities forming part of Lagardère Unlimited had guaranteed minimum future payments amounting to €880m under long-term contracts for the sale of TV and marketing rights. These payments break down as follows by maturity: Maturity 2013 2014 201
Slide 38: Cash flow statement data – Lagardère Publishing
Cash flow statement data – Lagardère Publishing (€m) 2011 2012 Cash flow from operations before interest, taxes 228 217 Changes in working capital (42) (21) Cash flow from operations 186 196 Interest paid & received, income taxes paid (56) (50) Cash generated by/(used in) operating activities 130 14
Slide 39: Cash flow statement data – Lagardère Active
Cash flow statement data – Lagardère Active (€m) 2011 2012 Cash flow from operations before interest, taxes 123 67 Changes in working capital (69) 6 Cash flow from operations 54 73 Interest paid & received, income taxes paid (75) (57) Cash generated by/(used in) operating activities (21) 16 Acquisit
Slide 40: Cash flow statement data – Lagardère Services
Cash flow statement data – Lagardère Services (€m) 2011 2012 Cash flow from operations before interest, taxes 153 156 Changes in working capital (37) (29) Cash flow from operations 116 127 Interest paid & received, income taxes paid (30) (31) Cash generated by/(used in) operating activities 86 96 Ac
Slide 41: Cash flow statement data – Lagardère Unlimited
Cash flow statement data – Lagardère Unlimited (€m) 2011 2012 Cash flow from operations before interest, taxes 103 101 Changes in working capital (17) 20 Cash flow from operations 86 121 Interest paid & received, income taxes paid (30) (19) Cash generated by/(used in) operating activities 56 102 Acq
Slide 42: Definitions of Recurring Media EBIT, EBITDA and Adjusted Net Income
For the record : definitions of Recurring Media EBIT, EBITDA and Adjusted Net Income Recurring Media EBIT before associates is defined as the difference between earnings before interest and tax and the following items of the profit and loss statement: • contribution of associates; • gains or losses
Slide 43: Financial profile – 2012
Financial profile – 2012 Net sales by division Recurring EBIT by division Unlimited 6% Services Publishing 27% 28% Publishing Active 56% Services Active 17% 52% 14% Note : Recurring EBIT - 2012 - Unlimited:-€33m Net sales by geographic area USA & Canada Eastern 10% Europe 12% France 36% Asia/Pacific
Slide 44: Lagardère profile evolution
Lagardère profile evolution High growth * 100% +18 pts 80% Emerging 60% Non markets 40% advertising +6 pts 20% +8 pts 0% 2003 2012 Rights and As % of sales Non paper content ** +11 pts +20 pts Digital Digital (Excl. Services) (Excl. Services) +8 pts *Duty free, Digital, TV production, Unlimited, DTT
Slide 45: Dividend
Dividend A policy of maintaining a stable dividend payout, representing around 75% of adjusted net earnings per share (excluding EADS). 1,4 80% 80% 1,30 € 1,30 € 1,30 € 1,30 € 1,30 € 1,30 €* 1,20 € 1,2 70% 63% 73% 1,10 € 58% 57% 1,00 € 60% 1 0,90 € 48% 47% 55% 43% 50% 42% 0,8 40% Dividend per Share
Slide 46: Higher exposure to emerging markets
Higher exposure to emerging markets As % of sales 3% 13% 3% 10% 11% 19% Other (MEA) Latin America 18% 9% Oceania Pacific Emerging markets Asia +6pts Eastern Europe USA & Canada 87% 81% Mature markets Western Europe 69% 72% 2003 2012 46
Slide 47: Sports 2011-2015 calendar
Sports 2011-2015 calendar Historical cycle Future cycle 2008 2009 2010 2011 2012 2013 2014 2015 Euro Final Phase Euro Qualifiers World Cup Qualifiers Asian Cup Olympic Tournament Qualifiers World Cup Qualifiers 1 1 Africa Cup IAAF World Championships Calendar effect Year on Year Positive Impact on L
Slide 48: e-Books: Answer to potential threat (1/5)
e-Books: Answer to potential threat (1/5) Risk # 1 : Self-publishing “Big ticket authors will publish themselves online” • But who will pay them their big advances up front ? • Who will help them improve their copy ? • Who will manage their promo tours and their web sites ? • Who will do their marke
Slide 49: e-Books: Answer to potential threat (2/5)
e-Books: Answer to potential threat (2/5) Risk # 2 : Disintermediation “Large e-tailers will become publishers” • The largest e-tailer (Amazon) only commands a 15% market share (print & ebook). Who wants to limit his audience to such a small fraction of the market ? • Who can be sure his/her e-publi
Slide 50: e-Books: Answer to potential threat (3/5)
e-Books: Answer to potential threat (3/5) Risk # 3 : Piracy “Why buy e-books when it’s so easy to download them illegally ?” • DRMs and piracy tracking agencies are a good deterrent. • The demographics of books buyers are not similar to those of music consumers (older, more affluent, more law-abidin
Slide 51: e-Books: Answer to potential threat (4/5)
e-Books: Answer to potential threat (4/5) Risk # 4 : e-tailer market dominance “A high retail price policy is unsustainable when access to market is controlled by a few huge players” • The “agency contract”, upheld by DoJ and European Commission, is effective protection against deep discounting whil
Slide 52: e-Books: Answer to potential threat (5/5)
e-Books: Answer to potential threat (5/5) Risk # 5 : Profitability “Migrating from print to digital will negatively impact the profitability of the publishing industry” • Many high margin books (illustrated, coffee-table, how-to, boxes…) still don’t lend themselves to digitization. • School book dig
Slide 53: Lagardère Unlimited: growth in the global Sports market
Investor presentation, March 2013 Lagardère Unlimited: growth in the global Sports market 1. Sports market growth (media rights, sponsorship, ticketing) in $bn CAGR 125 +6% CAGR 101 92 + 3% Source : PwC. 2007 2011 2015 2. Our strategy: consolidate the existing assets and expand progressively in • Ne
Slide 54: Travel Retail: a fast growing market
Travel Retail: a fast growing market Travel retail market size and growth perspectives (€ bn, %, 2011) S = €75bn Others1 €30bn, 40% Stations 40% €13bn, 17% + 65% 55% Airports €32bn, 43% + = Annual growth until 2020 (% p.a.) 60% 20% + = 0% - 2% + 2% - 4% + 35% 25% + + 4% - 8% + + > 8% Duty Free Trave
Slide 55: Travel Retail: emerging countries heavily contribute to growth worldwide
Travel Retail: emerging countries heavily contribute to growth worldwide Increase1 in total air traffic between Sales Per Pax for BRIC destinations 2006 and 2011 (As a multiple of the SPP of the remaining pax, 2011) (€ bn, %, 2006-2011) Paris Duty Free 5,5x Prague Duty Free 7,0x Rest Of the Warsaw 6
Slide 56: LS Travel retail: organic growth as main past development
LS Travel retail: organic growth as main past development Sales@100% growth breakdown by nature (€ m, 2006-2011) 2,267 580 135 207 Tenders won +46% 373 Existing contracts 1,552 4/5 1/5 of total growth of total growth 2006 Organic growth Acquisitions 2011 Source: Lagardère Services 56
Slide 57: LS Travel Retail: an international player across all territories and channels
LS Travel Retail: an international player operating across all territories and all channels LS Travel Retail sales@100% breakdown by geography and channel (€ bn, %, 2011) 100% = €2.3bn Others1 €0.5bn, 21% 15% 20% 35% Stations €0.5bn, 24% 30% 15% 77% Airports €1.3bn, 55% 55% 50% Western Europe Emergi
Slide 58: LS Travel Retail strategic objectives
Investor presentation, March 2013 LS Travel Retail strategic objectives LS Travel Retail sales and Ebitda margin evolution – Proportional view* (2011-2016) Sales growth** Ebitda margin improvement** +10% +0.5 pt to +1.0 pt per annum over the period 2/3 by organic growth Favorable mix evolution
Slide 59: LS Travel Retail: a balanced mix of products
LS Travel Retail: a balanced mix of products LS Travel Retail sales@100% breakdown by product (€ bn, %, 2011) Perfume Other1 & Cosmetics 15% 15% Print 16% €2.3bn Wine, Liquor 31% & Tobacco 18% Food 5% & Beverage (1) Gifts, souvenirs, electronics, gourmet food, lottery, phone cards, etc. Fashion Sour
Slide 60: Acquisition of Roma airport duty free contract
Acquisition of Roma airport duty free contract Acquisition in September 2012 of the the Duty Free activity of Aeroporti di Roma, operator of the duty free/paid concessions in Roma airports (Fiumicino and Ciampino) Contract profile : • 14 years contract • Exclusivity for core categories (duty free) •
Slide 61: Lagardere Services ROCE
Lagardere Services ROCE ROCEs (€ m, %, 2012) Capital ROCE employed 1 after tax 2 388 12% -53 ∞ 335 23% (1) Average during the year (2) Recurring EBIT post tax and associates / Capital Employed including Goodwill 61
Slide 62: Lagardère IR Team and calendar
Lagardère IR Team and calendar IR team details Calendar Anthony MELLOR 2013 General Meeting Head of Investor Relations To be held on May 3, 2013 at 10:00 a.m. at the Carrousel du Louvre in Paris. Tel: 33 1 40 69 18 02 amellor@lagardere.fr Dividend The ex-dividend date is Tuesday, May 7, 2013 (mornin
Slide 63: Disclaimer
Disclaimer Certain statements contained in this document are forward-looking statements which address our vision of expected future business and financial performance. Undue reliance should not be placed on such statements which are subject to risks and uncertainties. When used in this document, wor